Beardslee v. Hemingway — 47 N.Y. St. Rep. 922

Majority

p. 922

Darwin M. Beardslee, Resp’t, v. Vincent W. Hemingway et al., Adm’rs, App’lts.

(Supreme Court, General Term, Fourth Department,

Filed September 30, 1892.)

Headnote

1. Partnership—Liability of estate of deceased partner.

Plaintiffl’s assignor held certificates of deposit drawing three per cent, issued by a firm of which defendant’s intestate was a partner. After his death said assignor wished to withdraw his money, claiming that he could, get more interest, when the surviving partner agreed to pay more interest! if he would allow it to remain, which he did. There was no agreement as-to the time it should remain and none which would prevent a demand, therefor at any time. Held, that there was no extension of the time of payment which would discharge the estate of the deceased partner.

3. Same—Insolvency of survivor.

A creditor may maintain an action to enforce payment from the estate-of a deceased partner without first obtaining judgment against the survivor where the survivor is shown to be insolvent.

Appeal from judgment entered in Broome county on 24tb August, 1891. The case was tried at Broome circuit, May, 1891r before the court without a jury, and the decision of the court, was in favor of plaintiff for $1,208 and interest at three per cent from December 1, 1889.

Alex. & A. W. Cumming, for app’lts; Carver, Deyo & Jenkins, for resp’t.

—This action is brought to recover the amount of four certificates of deposit, amounting in the aggregate to $l,208r given by the banking firm of H. Hemingway & Son to P. P. Beardslee, prior to May 14, 1886. The certificates were in th&= usual form and each had the clause, “ interest at three per cent if left six months.” The firm was composed of Harry Hemingway and Eugene B. Hemingway. The former died on May 14r 1886, and the certificates in question were then outstanding. Eugene B. continued and individually carried on the business at. the same place, and also adjusted unsettled copartnership business.

On or about June 15, 1886, there was a conversation between P. P. Beardslee and Eugene B. Hemingway with reference to an increased rate of interest upon the certificates. Beardslee said to-Hemingway that he could at some other bank get four per cent, and Hemingway replied that he would allow him four per cent on the-certificates if he would leave them. At the close of Hemingway’s evidence, in reply to the question, “When you agreed to pay the four per cent, what was the conversation btween you and Mr. Beardslee, the witness testified: “ He said he could get four per cent.

p. 923

here in Binghamton at the savings bank, and that if I could not pay it he would probably make the change; he did not say he really would, but carried that idea, and I told him I would give him the increased rate of interest, four per cent, on the condition that he left it; that is all the conversation in regard to it.” In substance, Hemingway verbally agreed to pay Beardslee four per cent interest if he would leave the money. The money was not drawn out, and-thereafter and up to December 1, 1889, interest was paid at the rate of four per cent. There was, as the court below found on sufficient evidence, no agreement to leave the money any time, or till the happening of any event, and no agreement which would have prevented the holder from demanding the same at any time. The defendants had no knowledge of and did not consent to the change of interest. They were appointed administrators on the 23d September, 1886.

Shortly after December 1, 1889, Eugene B. Hemingway failed. The present action was commenced on 20th August, 1891, and the plaintiff, to whom the certificates had been transferred, recovered their amount, with interest at three per cent from December 1, 1889.

The defense is mainly based on the transaction between plaintiff’s assignor and the surviving partner with reference to the increased rate of interest

There was nothing to prevent the creditor from demanding his pay at any time upon the certificates. There was therefore no extension of time of payment that would release the estate of thq deceased partner, assuming it occupies the position of a surety. Indeed the claim of the defendant does not seem to be placed on this basis, but upon the theory that there was in effect a new contract between the creditor and the surviving partner that operated to release the estate.

In Hamersley v. Lambert, 2 Johns. Ch., 508 , it is said by Chancellor Kent to be the established doctrine that neither delay, nor lapse of time, nor dealing with the survivor, nor calling for and receiving part of the debt from the survivor, amounts to a waiver, or bar of the claim upon the assets of the deceased. In Parsons on Partnership, 438, 2d ed., it is said, with reference to the liability of a retiring partner, that “ if a creditor of a firm contracts or agrees with a new firm to take their security in discharge of that of the old, the retiring partner is discharged from any liability to pay the debt, -and whether such an agreement has taken place is a question of fact for the jury. To discharge the retiring-partner, however, it is not sufficient to take a new security, but there must be an agreement to discharge him from the liability of the old firm.” The mere receiving of interest from the new firm will not discharge the old. Id., 441; Daniel v. Cross, 3 Ves., 277. In Heath v. Percival, 1 Peere Williams, 682; S. C., 1 Str., 403, and referred to in 2 Coll. on Part., 6th ed., 914, there was an agreement by the continuing partner to pay an increased rate of interest, and a receipt of the same by the creditor. It was held that the estate of the retiring partner was not released. The question in such cases seems to be whether the transactions show that the

p. 924

creditor has accepted the liability of the survivor in discharge of the liability of the partnership, Winter v. Innes, 4 Myl. & Craig, 101; 16 Am. & Eng. Encyc. of Law, 906, 908, and cases cited; Fogarty v. Cullen, 49 Superior Court, 397, and this is a question, of fact. Harris v. Farwell, 15 Beav., 33.

In the present case, the certificates of the firm were not surrendered, nor was there any further obligation in writing taken from the survivor. The creditor was given the option of allowing 'his-money to remain, and receiving an increased rate of interest. This option the creditor availed himself of for several years. Th& debt was not changed. There is no finding, or request to find, that the creditor intended to release the estate, or that the survivor intended or agreed to become solely liable. We cannot, say as matter of law, upon the facts as here presented, that such intent existed on the part of either party, or that exclusive credit, for the debt was given to the survivor. It follows that the defense in this regard is not made out.

In the course of the trial the plaintiff showed that on the 2d July, 1890, he recovered a judgment in the supreme court against Eugene B. Hemingway upon the claim in controversy, upon which execution was .thereafter issued and returned wholly unsatisfied The defendants claim that this judgment is invalid by reason of certain defects in the affidavits upon which an order for the service of the summons by publication was based. This question it. is not important here to consider, as it is found upon sufficient evidence that Eugene B. Hemingway at the time of the commencement of this action and for some time prior thereto was insolvent. This authorized an action to enforce payment against, the estate of the deceased partner; Pope v. Cole, 55 N. Y., 124 .

It was not error for the court to decline to receive evidence that defendants had no assets. Code, § 1824. Nor does it appear that the ruling of.the court as to certain declarations of plaintiff’s, assignor was erroneous. Clews v. Kehr, 90 N. Y., 633 .

The judgment should be affirmed.

Judgment affirmed, with costs.

Hardin, P. J., and Martin, J., concur.